Don’t ignore contribution limits IRAs have contribution limits, and investing more than these limits could result in a penalty tax. You can store coins or gold bars in a precious metal IRA. Despite the colloquial term “gold IRA,” you can hold silver, platinum, and palladium in this account. You don’t want to fund a gold IRA with cash because you’ve already paid taxes on that money, and the point of using an IRA as an investment tool is to take advantage of the tax advantage that comes with using pre-tax dollars.
While you can gain exposure to gold in a normal retirement account by owning stocks or funds, you can’t hold the physical asset in an IRA or 401 (k). If you’re not sure whether a gold IRA or a silver IRA is right for you, contact a fee-based financial planner who isn’t affiliated with a gold IRA company to determine whether it would be a good addition to your portfolio. If you withdraw gold from your IRA before you’re 59½ years old, you’ll be charged income tax on the value of that gold, as well as a 10% penalty for making an early withdrawal from a retirement account. These companies should provide secure storage for your investments and guarantee that all gold is insured.
For more information on what to look for when choosing a Gold IRA company, check out Money’s Guide to the Best Gold IRA Companies. However, the IRS has introduced additional tax filing and record keeping requirements for gold IRAs due to the more complicated assets they own. To avoid running afoul of tax rules for proprietary transactions, self-governing IRAs, including gold IRAs, must have an IRS-approved custodian bank. While regular IRAs hold investments such as stocks, bonds, and mutual funds, gold IRAs hold, you guessed it, physical gold.
How much you should invest in a Gold IRA depends on your investment and retirement goals as well as your current financial situation. The IRS requires you to store your gold in an IRS-approved depot, a company that manages and stores precious metals. Investing in physical gold through your IRA can be a great way to diversify your investments, particularly if you’re planning to use it as protection against inflation and market volatility. Annual fees are generally charged by the account custodian, and storage and insurance fees are more often owed to the custody account than to the Gold IRA company.
One important rule to know about storing physical gold in an IRA is that your precious metals MUST be stored at an approved depository institution such as the Delaware Depository Service Company or Brink’s Global Services, not in your home or in a safe. A gold IRA can give you the tax benefits of a traditional retirement account, but you must comply with IRS regulations or risk fines and penalties. Before you open a gold IRA, keep in mind that it’s not the only way to invest in gold with your retirement funds.
